{"id":19767,"date":"2020-04-26T13:38:14","date_gmt":"2020-04-26T17:38:14","guid":{"rendered":"https:\/\/www.pgmcapital.com\/?p=19767"},"modified":"2020-04-26T13:39:27","modified_gmt":"2020-04-26T17:39:27","slug":"wti-crude-crashed-to-negative-price-on-monday-april-20","status":"publish","type":"post","link":"https:\/\/www.pgmcapital.com\/nl\/wti-crude-crashed-to-negative-price-on-monday-april-20\/","title":{"rendered":"WTI Crude Crashed to Negative Price On Monday April 20."},"content":{"rendered":"\n<p>Dear PGM Capital blog readers,<\/p>\n\n\n\n<p>In the afternoon of\u00a0 Monday,\u00a0April\u00a020,\u00a0the price of West Texas Intermediate oil futures for delivery in May fell to\u00a0negatives\u00a0as low as $38.96 a barrel, to close on Friday, April 24, at US$ 17.18 a barrel, as can be seen from below chart.<\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-full is-resized\"><img decoding=\"async\" src=\"https:\/\/www.pgmcapital.com\/wp-content\/uploads\/2020\/04\/Screen-Shot-2020-04-25-at-3.03.28-PM.png\" alt=\"\" class=\"wp-image-19775\" width=\"900\" srcset=\"https:\/\/www.pgmcapital.com\/wp-content\/uploads\/2020\/04\/Screen-Shot-2020-04-25-at-3.03.28-PM.png 861w, https:\/\/www.pgmcapital.com\/wp-content\/uploads\/2020\/04\/Screen-Shot-2020-04-25-at-3.03.28-PM-300x89.png 300w, https:\/\/www.pgmcapital.com\/wp-content\/uploads\/2020\/04\/Screen-Shot-2020-04-25-at-3.03.28-PM-768x227.png 768w\" sizes=\"(max-width: 861px) 100vw, 861px\" \/><\/figure><\/div>\n\n\n\n<h3 class=\"wp-block-heading\">INTRODUCTION:<\/h3>\n\n\n\n<p>The corona virus has severely reduced oil demand around the world due to large declines in airline, car, shipping, and trucking traffic as well as manufacturing production.<\/p>\n\n\n\n<p>Oil is sold through futures contracts, meaning there is a gap between the contracted price and the spot price paid at its actual delivery date.<\/p>\n\n\n\n<p>The contracts for May were set for Tuesday, April 21, and that pricing gap grew as more traders anticipated demand would not return until at least the fall, resulting in a historic sellout.<\/p>\n\n\n\n<p>Monday April 20 price was the lowest at least, since records started being kept by BP\u00a0in 1861.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">WHY <strong>NEGATIVE US OIL PRICE<\/strong>?<\/h3>\n\n\n\n<p>Negative May oil futures price resulted from traders who do not wish to take physical oil delivery.<\/p>\n\n\n\n<figure><iframe loading=\"lazy\" width=\"560\" height=\"315\" src=\"https:\/\/www.youtube.com\/embed\/m-3q7hiPxF4\" allowfullscreen=\"\"><\/iframe><\/figure>\n\n\n\n<p>Many investors became frantic, due to negative May WTI oil futures prices. Oil futures traders, &#8212; who do not take physical oil delivery &#8211; are closing their positions, dumping those future positions on the market, regardless of the price. <\/p>\n\n\n\n<p>However, it does not represent the overall oil market. It is just a matter of contract expiration and contract rollover.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">PGM CAPITAL ANALYSIS &amp; COMMENTS:<\/h3>\n\n\n\n<p>With low global demand and excess supply, excess crude oil needs somewhere to be stored. <\/p>\n\n\n\n<p>As a consequence, the demand for renting oil tankers to store oil skyrockets, driving up tankers\u2019 charter rates. <\/p>\n\n\n\n<h5 class=\"wp-block-heading\">Royal Vopak:<\/h5>\n\n\n\n<p>Royal Vopak N.V., (VPK.AS), the world\u2019s biggest independent oil storage company has all but run out of space for crude and refined products as a result of the fast-expanding glut that Covid-19 has created.<\/p>\n\n\n\n<p>Rotterdam-based Royal Vopak N.V., said in an interview:<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\"><p>\u201cThe available capacity on the oil side is almost completely sold out for our terminals&#8221;&nbsp;<\/p><p>\u201cFor Vopak, worldwide available capacity that is not in maintenance is almost all gone and from what I hear elsewhere in the world we\u2019re not the only ones.&#8221;<\/p><\/blockquote>\n\n\n\n<p>As can be seen from below chart the shares of the company has soared with 12.75 percent in the past 30 days.<\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large is-resized\"><img decoding=\"async\" src=\"https:\/\/www.pgmcapital.com\/wp-content\/uploads\/2020\/04\/Screen-Shot-2020-04-25-at-4.36.09-PM-1-1024x505.png\" alt=\"\" class=\"wp-image-19790\" width=\"800\" srcset=\"https:\/\/www.pgmcapital.com\/wp-content\/uploads\/2020\/04\/Screen-Shot-2020-04-25-at-4.36.09-PM-1-1024x505.png 1024w, https:\/\/www.pgmcapital.com\/wp-content\/uploads\/2020\/04\/Screen-Shot-2020-04-25-at-4.36.09-PM-1-300x148.png 300w, https:\/\/www.pgmcapital.com\/wp-content\/uploads\/2020\/04\/Screen-Shot-2020-04-25-at-4.36.09-PM-1-768x379.png 768w, https:\/\/www.pgmcapital.com\/wp-content\/uploads\/2020\/04\/Screen-Shot-2020-04-25-at-4.36.09-PM-1.png 1450w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure><\/div>\n\n\n\n<h5 class=\"wp-block-heading\">Tankers as Storage:<\/h5>\n\n\n\n<p>The strain on storage is also starting to create some strange shipping movements as traders send tankers on odysseys to find the best places to stash supplies. <\/p>\n\n\n\n<p>The amount of oil stored at sea has also increased to almost 250 million barrels and global floating storage is now accelerating at an unprecedented pace, an analyst said in a research note on Tuesday April 21.<\/p>\n\n\n\n<p>The charter rates of very large crude carriers (VLCCs), which can store up to 2 million barrels of oil, have more than doubled, possibly being as much t as\u00a0<a rel=\"noreferrer noopener\" href=\"https:\/\/www.theguardian.com\/business\/2020\/apr\/19\/supertankers-drafted-in-to-store-glut-of-crude-oil-coronavirus\" target=\"_blank\">$350,000<\/a>\u00a0per day. <\/p>\n\n\n\n<p>Due to the tremendous demand for oil storage with limited tankers, the charter rates will keep going up.<\/p>\n\n\n\n<p>As a consequence of this shares of SFL Corporation Ltd. (NYSE: SFL), engages in the ownership, operation, and chartering out of vessels&nbsp;for oil transportation, soared with 24.88 percent in the last 30 days as can be seen from below chart.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large is-resized\"><img decoding=\"async\" src=\"https:\/\/www.pgmcapital.com\/wp-content\/uploads\/2020\/04\/Screen-Shot-2020-04-25-at-4.18.23-PM-1024x506.png\" alt=\"\" class=\"wp-image-19784\" width=\"800\" srcset=\"https:\/\/www.pgmcapital.com\/wp-content\/uploads\/2020\/04\/Screen-Shot-2020-04-25-at-4.18.23-PM-1024x506.png 1024w, https:\/\/www.pgmcapital.com\/wp-content\/uploads\/2020\/04\/Screen-Shot-2020-04-25-at-4.18.23-PM-300x148.png 300w, https:\/\/www.pgmcapital.com\/wp-content\/uploads\/2020\/04\/Screen-Shot-2020-04-25-at-4.18.23-PM-768x379.png 768w, https:\/\/www.pgmcapital.com\/wp-content\/uploads\/2020\/04\/Screen-Shot-2020-04-25-at-4.18.23-PM.png 1446w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<h5 class=\"wp-block-heading\">Stress in the oil industry:<\/h5>\n\n\n\n<p>The S&amp;P 500&#8217;s energy sector has lost more than 40% of its value this year, despite the dramatic rebound in the overall stock market over the past month.<\/p>\n\n\n\n<p><a rel=\"noreferrer noopener\" href=\"https:\/\/www.rystadenergy.com\/\" target=\"_blank\">Rystad Energy<\/a> &#8211; an independent energy consulting firm -, predicts that more than US$70 billion of oil company debt will be reorganized in bankruptcy, followed by US$177 billion in 2021. This would only accounts for exploration and production companies, not the servicing industry that provides the tools and manpower to drillers.<\/p>\n\n\n\n<p>The nightmarish scenario could present lucrative buying opportunities for the industry&#8217;s biggest players. Struggling oil companies, either in bankruptcy or before it, will be forced to sell off prime acreage &#8212; at fire sale prices. The Biggest Oil and Gas Companies in the World could be tempted to make acquisitions.<\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large is-resized\"><img decoding=\"async\" src=\"https:\/\/www.pgmcapital.com\/wp-content\/uploads\/2020\/04\/17930-1024x902.jpeg\" alt=\"\" class=\"wp-image-19795\" width=\"700\" srcset=\"https:\/\/www.pgmcapital.com\/wp-content\/uploads\/2020\/04\/17930-1024x902.jpeg 1024w, https:\/\/www.pgmcapital.com\/wp-content\/uploads\/2020\/04\/17930-300x264.jpeg 300w, https:\/\/www.pgmcapital.com\/wp-content\/uploads\/2020\/04\/17930-768x677.jpeg 768w, https:\/\/www.pgmcapital.com\/wp-content\/uploads\/2020\/04\/17930.jpeg 1169w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure><\/div>\n\n\n\n<h4 class=\"wp-block-heading\">Disclosure:<\/h4>\n\n\n\n<p>In our personal portfolio and the ones of our clients,\u00a0we own shares of; SINOPEC, Royal Dutch Shell, BP, PetroChina and SFL Corporation.<\/p>\n\n\n\n<p>PGM Capital is at your service as your, Professional, Trustworthy and Dedicated, Financial Adviser and Asset Management.<\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img decoding=\"async\" src=\"https:\/\/www.pgmcapital.com\/wp-content\/uploads\/2019\/09\/When-you-succeed-we-succeed-transparant-1.png\" alt=\"\" width=\"700\"\/><\/figure><\/div>\n\n\n\n<p>Last but not least, before taking any investment decision, always take your investment horizon and risk tolerance into consideration. Keep in mind that share prices do not move in a straight line. Past Performance Is Not Indicative Of Future Results.<\/p>\n\n\n\n<p>Yours sincerely,<\/p>\n\n\n\n<figure class=\"wp-block-image is-resized\"><a href=\"https:\/\/www.pgmcapital.com\/wp-content\/uploads\/2015\/06\/eric.jpg\"><img decoding=\"async\" src=\"https:\/\/www.pgmcapital.com\/wp-content\/uploads\/2015\/06\/eric.jpg\" alt=\"\" class=\"wp-image-14\" width=\"110\" srcset=\"https:\/\/www.pgmcapital.com\/wp-content\/uploads\/2015\/06\/eric.jpg 160w, https:\/\/www.pgmcapital.com\/wp-content\/uploads\/2015\/06\/eric-150x150.jpg 150w\" sizes=\"(max-width: 160px) 100vw, 160px\" \/><\/a><\/figure>\n\n\n\n<p>Eric Panneflek<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Dear PGM Capital blog readers, In the afternoon of\u00a0 Monday,\u00a0April\u00a020,\u00a0the price of West Texas Intermediate oil futures for delivery in May fell to\u00a0negatives\u00a0as low as $38.96 a barrel, to close on Friday, April 24, at US$ 17.18 a barrel, as can be seen from below chart. INTRODUCTION: The corona virus has severely reduced oil demand<a href=\"https:\/\/www.pgmcapital.com\/nl\/wti-crude-crashed-to-negative-price-on-monday-april-20\/\">[&#8230;]<\/a><\/p>\n","protected":false},"author":2,"featured_media":19778,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[51],"tags":[],"class_list":["post-19767","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-pgm-capital-blog"],"_links":{"self":[{"href":"https:\/\/www.pgmcapital.com\/nl\/wp-json\/wp\/v2\/posts\/19767","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.pgmcapital.com\/nl\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.pgmcapital.com\/nl\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.pgmcapital.com\/nl\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.pgmcapital.com\/nl\/wp-json\/wp\/v2\/comments?post=19767"}],"version-history":[{"count":25,"href":"https:\/\/www.pgmcapital.com\/nl\/wp-json\/wp\/v2\/posts\/19767\/revisions"}],"predecessor-version":[{"id":19799,"href":"https:\/\/www.pgmcapital.com\/nl\/wp-json\/wp\/v2\/posts\/19767\/revisions\/19799"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.pgmcapital.com\/nl\/wp-json\/wp\/v2\/media\/19778"}],"wp:attachment":[{"href":"https:\/\/www.pgmcapital.com\/nl\/wp-json\/wp\/v2\/media?parent=19767"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.pgmcapital.com\/nl\/wp-json\/wp\/v2\/categories?post=19767"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.pgmcapital.com\/nl\/wp-json\/wp\/v2\/tags?post=19767"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}